Audio 5:13
Toyota to decide future in Australia by mid-year

Pat McGrathUpdated
Mon 6 Jan 2014, 6:43 PM AEDT

Toyota says it will know by the middle of this year whether it will make cars in Australia beyond 2018. Toyota Australia is bidding for a contract to continue manufactuing and exporting Camry vehicles. If it fails to win the tender, the car maker could follow the lead of Holden and Ford, which both plan to pull out of Australia in the next few years.

Transcript

Toyota says it will know by the middle of this year whether it will make cars in Australia beyond 2018.

Toyota Australia is bidding for a crucial contract to continue manufacturing and exporting Camrys.

If unsuccessful, Toyota could follow the lead of Holden and Ford, which both plan to pull out of Australia in the next few years.

Business reporter Pat McGrath has more.

PAT MCGRATH: Since General Motors announced in December that it will close its Holden plants in Victoria and South Australia after 2017, Toyota has faced the prospect of becoming the only company making cars in Australia.

Toyota's director of sales and marketing, Tony Cramb, believes the Japanese auto giant can survive alone, as long as there are still cars to be made.

TONY CRAMB: In order to achieve that we need to earn the next generation of Camry with export. And that decision will be made this year. So we're doing everything we can; we're controlling everything that we can control in order to secure that decision.

PAT MCGRATH: To keep Camry production here, Toyota's Australian division must prove it can make them cheaply.

TONY CRAMB: There's many factors that are involved in where a vehicle is manufactured in the world. And in the Toyota system we need to compete with other plants for the right to produce Camry for our market and also for our export markets. And so, that competition or that process is underway right now.

PAT MCGRATH: If Toyota's executives in Tokyo move to shift production out of Australia, when their decision is due halfway through this year, it will be a crucial moment for Toyota and its thousands of Australian workers.

TONY CRAMB: That will be the point at which we make the decision about whether we're going to manufacture in Australia.

PAT MCGRATH: Tony Cramb's comments come as figures released by the Federal Australian Chamber of Automotive Industries showed the Toyota Corolla was the country's top selling car last year.

Its sales increased by 12 per cent in 2013, to 43,500.

Toyota doesn't make Corollas in Australia, and the second-ranked Mazda-3 is also made offshore.

But Tony Weber, from the Chamber of Automotive Industries, thinks it was a strong year for locally made cars, despite the bad press.

TONY WEBER: Local manufacturers received a lot of attention last year, including comments that they were not making the vehicles Australians wanted. The 2013 sales result proved that, once again, this is just not true.

Throughout the year I noted that the Australian made Holden Commodore, Toyota Camry and Holden Cruze continually made the top 10 sales around the country.

PAT MCGRATH: However, while it did stay in the top 10, Commodore sales dropped by 9 per cent last year.

Sales of the Australian-made Holden Cruze plunged by 16 per cent.

The total number of new cars sold increased by 2.2 per cent, to a new record of 1.13 million.

Camry sales dropped by 9 per cent.

Automotive industry analyst Richard John says Toyota exports about half of the Camrys it makes in Australia.

So he thinks local sales will play only a small role in Toyota's decision to keep making the Camry here.

RICHARD JOHN: One would surely be whether they believe the Australian Dollar will stay as strong as it's been over recent years, or even just in recent weeks. I personally would expect the Australian Dollar to fall further.

However, they will also be looking for continuing improvements in efficiency in operations within Australia.

PAT MCGRATH: So what does it say about the structure of the industry that the biggest selling car isn't actually made here?

RICHARD JOHN: It says that the number of vehicles in the Australian market and indeed around the world increased dramatically. In many ways, the fact that the locally produced cars are not amongst the biggest sellers is not so much that particular import cars have increased their numbers significantly, but more that the locally made cars have lost their sales to the increasing numbers of SUVs and other sorts of vehicles that have been released.

PAT MCGRATH: Richard John notes that Toyota has joined Ford and Holden in making its internal financial challenges very public.

RICHARD JOHN: Toyota is trying to make clear to the Government that it has to seriously look at its future in Australia. And in the same way it's been quite public about its relationship with its workforce.

I think Toyota will look very seriously at staying here because they are the leading market in Australia. They sold last year over 200,000 vehicles in Australia, and the sale of the locally made cars is part of that. And with Holden and Ford going, they will probably get some extra fillip for Camry sales for business and government sources if they remain in Australia.

PAT MCGRATH: So there are also marketing and image imperatives to stay in Australia.